Global Stocks Fall On Fed Fear, EU Hits Two-Year Low, Santa Has No Love For Wall St. This Year

Asian Equities Fall In Wake Of FOMC Meeting

Asian markets fell in Thursday trading in the wake of the Wednesday’s FOMC meeting. The FOMC policy statement, outlook, and press conference produced a mixed-bag relative to the market’s expectation and left traders wary. The FOMC raised rates by a quarter point, as expected, and reduced its outlook for future rates, also as expected. What as not expected is the outlook for future rate hikes is still hawkish at 2 hikes in 2019, double what the market was looking for.

Adding to the unease were statements within the policy report and press conference that have cemented the specter of an economic recession in the minds of the market. The fed acknowledged risks to the global economy, cross-currents with the US economy, and reduced its growth forecast by 0.2%. US markets fell more than -2.0% on the news.

Asian indices were broadly lower in Thursday trading although losses were not uniform. The Japanese Nikkei led with a loss near -3.0% while others posted losses closer, or even less than, -1.0%.

Europe Under Pressure, Equities Hit Two-Year Low

European markets were also under pressure in Thursday trading as mounting global woe has investors flooding to cash. The indices were mixed at midday after posting near -2.0% decline in early trading. By midday, the declines had moderated but losses were being posted across the board. The DAX led with a decline of -1.0% with others in the region showing much smaller losses.

Shares of Airbus were among the hardest hit on Thursday after news the US DOJ was investigating the company hit the wires. The DOJ alleges inappropriate practices and sent shares down more than 9.0%. Shares of Indior were also down hard in early trading, shedding more than -6.0%, on word it would make a cheaper version of its opioid-addiction product. The retail sector also moved sharply lower, -3.0%, and is trading at freshly set lows.

No Santa Rally For Wall St. This Year

Market history tells us to expect a nice rally in equities going into the Christmas holiday season. Often referred to as the Santa Rally in honor of the jolly old elf, that trend is not present this year. US indices have been in a downtrend for weeks and hit new one and two years in Wednesday trading. Early Thursday futures action had the indices holding steady near Wednesday’s closing prices but there is little hope Santa Claus is coming to town this year.

In the news; The US Senate has passed a stop-gap measure to avoid a government shutdown, again. The measure puts off any real decision making until February 2019 at which time we can assume another shut-down will loom. The major sticking point in the budgeting process is Trump’s border wall and immigration reforms, two items the newly-elected Democratic House of Representatives are also passionate about.